The Next Life Cycle Assessment (LCA)
The global environmental goods and services (EGS) sector has been estimated to reach in 2010 a staggering $635 billion, representing an impressive growth of 45 percent over the past five years. By 2020, it could reach the one trillion dollar mark. Consultancy related to EGS contributes some 5 percent to the total, good for $32.7 billion today, ranging from advise on renewable energy, waste minimization, eco-design, carbon trading and undertaking Life Cycle Assessment (LCA) studies. The market is expected to growth to $45 billion by 2015 representing a huge opportunity for employment and entrepreneurship. At present the EU, US and Japan are estimated to account for 94 percent of the global market. Whereas the UK companies seem to have a strong position amongst the EU players, the Scandinavian consultancies thrive on their decades of their countries’ pioneering environmental policies and a broad demand for technological innovations. French law prescribes that effective 2011, all products sold in France must have an environmental product declaration (EPD), spurring further turnover in environmental consultancies, especially on Life Cycle Assessment (LCA). LCA consultancy offers a comprehensive way to calculate environmental impact. This supports purchasing decisions and permits the consumers to link ecological results with their intention to buy. It is expected that more members of the EU will pursue the same strategy as France. This will stimulate an even stronger growth in the development of consultancy companies. Enterprises like ERM, RPS, Environ and WSP emerged over the past decade with +1,000 experts each on the payroll, and dozens of offices spread around the world. The UK alone lists +600 companies that offer environmental consultancy services, and at least 75 have branch offices outside the British Isles. The UK – one of the few countries to gather detailed statistics on this growing business – estimates that in 2009 its companies were involved in more than 242,000 global contracts, with +60 percent originating from outside the UK.
The business model of environmental products and services has been limited to containing the negative effects of production and consumption. The standard jargon is about mitigation, protection, reduction. There is a need to shift from “doing less bad” to “doing more good”. This represents a major breakthrough since any attempt to preserve is unlikely to succeed in regenerating; and any strategy to mitigate is unlikely to succeed in improving. It is against this background that a new portfolio of environmental services are needed, identifying the opportunities for innovation using available resources. When Prof. Luigi Bistagnino, the dean of the School of Industrial Design at the Faculty of Architecture of the Politecnico di Torino (Italy) embarked on an undergraduate program to teach eco-design, he refused to embrace the mere “stealing less approach”. Professor Bistagnino argued that while we never appreciate a person who promises to steal less, we bestow environmental awards to companies that pollute less. The students were quite impressed with the logic that stealing less equals to polluting less, both continue to steal and pollute. This approach sets the stage for a fundamental shift in industrial design and permits new business models to emerge. This simple assessment lead Prof. Bistagnino to create a new type of LCA, starting with an assessment of performance based on the traditional input/output tables that lists all the elements needed to produce a product or a service, and quantifies all the outputs, including waste streams. This is part of a traditional ISO 14,000 certification. However, Prof. Bistagnino teaches his students that all the outputs that are left without use, now have to find an input, thus creating the output/input tables. This offers a creative platform for hundreds of business ideas. As the design students ventured through the materials and numbers, they realized that a lot of valuable waste is simply wasted. These assessments permitted to rethink the management of multi-layered packaging, ball bearings and even city’s sewage water.
The First Cash Flow
The first business that benefited from this new type of LCA for glass, in comparison with plastics. The traditional LCA favor plastic containers since these are lighter, thus require less energy, creating less greenhouse gases. As a result, across the globe plastic liquid packaging has gained a dominant market share against glass containers and multi-layered systems. However, following the logic presented at the Politecnico di Torino, glass can be recycled into glass foam, and this building material eliminates the need for additional insulation, the use of fire retardants, the application of fungicides, and water repellents. The higher expense in energy for the drink containers is more than offset with the savings in chemicals and building materials thanks to the multi-functionality of glass foam which -on top of it all- needs CO2 in its production process. It even gets better when the energy required to foam the glass is provided by methane from the landfill, where most of the glass is deposited against a fee. This changes not only the conclusions of the LCA clearly favoring glass over plastics, it even changes the basics of the business model: getting paid to use waste materials, using locally available energy without the need for any storage or transportation. This is a very new competitive model and is reminiscent of the Blue Economy: use what you have. It is no surprise that already three industrial investments have been successfully concluded in this field.
If the environmental consultancies around the world are prepared to go beyond the present assessments and strategy advises, then it will be possible to put our production and consumption system on a path towards sustainability. The consultancies can shift from the reduction of carbon footprints and cutting costs, to the identification of new opportunities, making high quality products cheaper, generating multiple incomes and benefits beyond the bottom line. Whereas Prof. Bistagnino only has a couple hundred undergraduates, a batch of a couple dozen masters have graduated. By the beginning of 2011, the first PhDs will be awarded creating a pool of highly skilled consultants, capable of designing production systems that outcompete on the basis of quality, price, and environmental performance, contributing to social development. It is hoped that by 2020 the first 200,000 contracts will have been awarded, generating thousands of jobs beyond the world of environmental advisory services as is practiced today. These new consultancies go beyond the exploitation of low labor costs somewhere in the world, squeezing the supply chain even further into price concessions thus reaching deeper into the third world for cheap inputs. These ecosystem designers will permit companies to outperform thanks to the creative use of available resources inspired by how the ecosystems cascade nutrients, material and energy.